Port Phillip Prison will close by the end of 2025 and the 59-year-old Dhurringile Prison shuts by September 2024, Corrections Minister Enver Erdogan announced on Wednesday.
Port Phillip, a maximum-security facility, has been open since September 1997 with a capacity of 1087 inmates and is operated by multinational security company G4S.
The contract with G4S was renegotiated in 2015 to extend beyond 2017 for up to 20 years, depending on performance.
Corrections Minister Enver Erdogan has announced the impending closure of two prisons. (Joel Carrett/AAP PHOTOS)
Mr Erdogan said the government gave notice to G4S last week of its intention to close the prison.
"I'm not going to go into details of the contract (as it's) commercial in confidence ... and a number of other reasons," he told reporters.
"But we're exercising our rights and we believe we're within our rights to shut down that prison."
The company, which employs more than 800 staff at Port Phillip, said it acknowledged the decision but did not address whether it would legally challenge the termination of its contract.
"G4S will work with our staff and partners to ensure a smooth closure and staff are redeployed where possible," a G4S spokesman said in a statement.
About 720 inmates from Port Phillip will be gradually transferred to Western Plains Correctional Centre in Lara, north of Geelong, from mid-2025 as part of the move.
Construction of the $1.1 billion, 1200-bed prison was completed in November 2022 but the facility has remained largely empty.
Mr Erdogan said the two-and-a-half-year hold-up in moving prisoners on site would allow for a safer transfer and more staff to be trained and recruited.
"We don't have the capacity issue so we're going to take the time to get this right," he said.
"We are talking about a maximum-security cohort."
The modern facility will offer prisoners better access to training and employment facilities. (Callum Godde/AAP PHOTOS)
Roughly 70 inmates at Dhurringile will likely move to the Beechworth minimum security prison.
Staff at both closing prisons will be given the opportunity to work elsewhere within Victoria's justice system or get redundancy packages.
Community and Public Sector Union Victorian secretary Karen Batt said job security for G4S officers was paramount.
"However, there's plenty of vacancies across the whole correctional system and a need to pull together a full job complement for the new Western Plains prison with plenty of lead time," she said.
"Dhurringile prison closure however needs more transition time as regional location makes job opportunities harder to find."
The high-tech Western Plains prison will use artificial intelligence to track people through its CCTV and have a workforce of about 600 staff.
Inmates will have increased access to specialist training and employment facilities.
Western Plains has been used as a training facility following its completion, and housed prisoners from Langi Kal Kal who were evacuated due to the threat of bushfires in February.
Opposition corrections spokesman Brad Battin condemned the government for leaving the facility empty and wasting taxpayer's money.
"Finally, the Allan Labor government has conceded the prison must open and operate to stop pouring millions of dollars down the drain that could be used to keep Victorians safe," he said.
The future of the prison sites is yet to be decided, but the Victorian Aboriginal Legal Service wants to see them made into places that support community members linked to the criminal justice system.
The service says despite being two per cent of the Victorian population, Aboriginal people represent about 20 per cent of inmates at Port Phillip and Dhurringile.
"Privately run, profit-driven prisons are extremely unsafe places for our people," chief executive Nerita Waight said in a statement.
"A prison sentence shouldn't be a death sentence, and our peoples' lives are not something to profit from."
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